Walgreens 2012 Annual Report Download - page 44

42 2012 Walgreens Annual Report
16. Subsequent Events
In connection with the Alliance Boots first-step transaction that closed on August 2,
2012, the Company borrowed $3.0 billion under a 364-day bridge loan facility.
On September 13, 2012, the Company repaid in full all amounts borrowed under
the bridge loan facility with a portion of the net proceeds from a public offering of
$4.0 billion of notes with varying maturities and interest rates, the majority of which
are fixed rate. In accordance with ASC Topic 470, Debt, the 364-day bridge loan
facility was refinanced on a long-term basis prior to the financial statements being
issued and as a result, outstanding borrowings under the bridge loan facility that existed
as of August 31, 2012, are classified as long-term debt on the Company’s balance
sheet. The following details each tranche of notes issued on September 13, 2012:
Notes Issued Maturity Interest Interest
(In millions) Date Rate Payment Dates
$ 550 March 13, 2014 Variable; March 13, June 13,
three-month September 13
U.S. Dollar LIBOR, and December 13;
reset quarterly, plus commencing
50 basis points December 13, 2012
750 March 13, 2015 Fixed 1.0% March 13 and
September 13;
commencing on
March 13, 2013
1,000 September 15, 2017 Fixed 1.80% March 15 and
September 15;
commencing on
March 15, 2013
1,200 September 15, 2022 Fixed 3.10% March 15 and
September 15;
commencing on
March 15, 2013
500 September 15, 2042 Fixed 4.40% March 15 and
September 15;
commencing on
March 15, 2013
$ 4,000
The Company may redeem the fixed rate notes at its option, at any time in whole,
or from time to time in part, at a redemption price equal to the greater of:
(1) 100% of the principal amount of the notes being redeemed; and (2) the sum of
the present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued as of the
date of redemption), discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate
(as defined), plus 12 basis points for the notes due 2015, 20 basis points for the
notes due 2017, 22 basis points for the notes due 2022 and 25 basis points for the
notes due 2042. If a change of control triggering event occurs, the Company will be
required, unless it has exercised its right to redeem the notes, to offer to purchase
the notes at a purchase price equal to 101% of their principal amount, plus accrued
and unpaid interest, if any, on the notes repurchased to the date of repurchase.
The notes are unsecured senior debt obligations and rank equally with all other
unsecured and unsubordinated indebtedness of the Company. Total issuance
costs relating to the notes, including underwriting discounts and fees, were an
estimated $25 million.
On September 17, 2012, the Company completed its purchase of USA Drug, a
regional drugstore chain in the mid-South region of the United States, from Stephen
L. LaFrance Holdings, Inc. and members of the LaFrance family. The transaction
includes 144 stores that operate under the USA Drug, Super D Drug, May’s Drug,
Med-X and Drug Warehouse names located in Arkansas, Kansas, Mississippi,
Missouri, New Jersey, Oklahoma and Tennessee. The acquisition also includes
corporate offices, a distribution center located in Pine Bluff, Arkansas, and a
wholesale and private brand business. Total consideration for the purchase was
approximately $438 million subject to adjustment in certain circumstances.
Notes to Consolidated Financial Statements (continued)